Featured Session: A Conversation with Garry Tan

00:00:00 Speaker 1 I am so excited to welcome you for our session. First few tips to make your life even better here. You may have noticed there is a lot of people here at CalFIRE, So I hope you've gotten some reservations for sessions that you really want to attend. If you couldn't get a reservation, don't worry, We have walk- up lines for everything. And if you can't get in here, because sometimes you don't, for the first time ever we have realtime audio. So not after the fact during the session. If you don't get in, just put your earphones in, go get a taco and listen. Listen live. Also, if you are interested in startups tonight from six to eight p.m. In this building, the JW is our South by Southwest pitch startup, awarding the winners tonight. So come check that out. And if you haven't been to Flash Off, our super rad poster art show that's ending today at the Marriott. 00:00:58 Speaker 1 Okay, this session is going to take questions and answers at the end. So you do that in the mobile app, pull up your app and ask the question. We'll see if it gets answered on stage. And with that, let's bring out what you are really here for. So as a technology community for two decades, I have witnessed firsthand how Y Combinator has made such an impact upon the startup ecosystem. The magic combination of funding mentoring, Maybe all boiled down into a three - month, batch might seem like an obvious winner now, but in two thousand and five that hit Silicon Valley like wildfire. That was a very, very new idea. You would boogie off the stage if I bored, you listing all the major successes that YC has nurtured because it lists some of the best companies in the world like Airbnb, DoorDash, Dropbox, Reddit so so many more. So we're going to be here. 00:01:58 Speaker 1 Gary, Gary Tan is president and CEO at Y Combinator, which he rejoined in twenty twenty three after founding Initialized Capital. Gary was one of YC's first partners and funded and advised many iconic YC companies like Instacart and Coinbase. In his early days, he served as a designer engineer, and he actually created Bookface, the internal network at YC that is still live to this day. He co-founded the blog platform Posterous, which was acquired by Twitter. And he was an early employee at Palantir. And I've got two fun facts for you. He designed the Palantir logo. That shows you what a well-rounded guy he is. And Gary told me that in 2009, When he was just a baby startup founder with not a penny to his pocket, he gave himself five. He stood on the street. He walked around trying to network, couldn't even afford a badge. 00:02:54 Speaker 1 And we have come full circle here, and we're here tonight on the big stage. We have not one but two world-class startup investors here. Gary will be interviewed by Bill Gurley, general partner at Benchmark Capital. Bill's list of startup successes is just as long as Gary's, And he has just published a book called " R unn ing Down, a D ream " about driving in a career. Love. And with that, let's bring him out. Here he is now. So, 00:03:37 Speaker 2 So first of all, if you don't know, I moved back to Austin about four years ago and I'm a frequent participant here at Shoprite. I'm a big Austin fan. I went to business school here in'91 to'93. And try and get back to this office as often as possible. So thrilled to help out, like elated to be able here today, Very to get to talk to why Combinator's impact on the startup ecosystem is like I keep saying somewhat miraculous. I mean, if you had heard the idea at the beginning, it'd be hard to anticipate everything they've accomplished. And I think there also been many lookalike attempts at recreating what. 00:04:23 Speaker 2 Would, my have done in a company were close to the output that you guys have been able to achieve? So it's uh it's remarkable, like really is. And if you'll allow me, I want to dive into that just a little bit. Let's start by just talking about the acquisition process. Who like, who might you want at the top of the funnel who doesn't know that? 00:04:55 Speaker 3 Everything's changed now. I am about fifty-five days into my own transformation from earlier. You know, I was used to be in the audience, or actually, I couldn't afford the badge. So I couldn't be in this room in two thousand nine when I started Postcross. And what I realized is that now one person can do the work of an SDP. I didn't have a blog post recently that got proper mention. 2, 000 times more productive than a Google engineer at the height in you know, 2009 or whenever it was. And uh I think that's everything just changed, right? And so we have a lot of rules, We have a lot of things that we picked up over the course of 20 years. We celebrated 21 years actually last week. And one of those might just be actually like we don't know. 00:05:53 Speaker 3 What's the message? It might be changing under your feet right now. Yeah, I mean, what I don't really care much. I care less and less what university someone went to or even where they work at. Uh, I actually want to see potential. 00:06:09 Speaker 2 So. So prior to the new AI enabled applicant, like just for to get get in our in our foundational mindset, what were like the three or four things, It would really make someone stand out. I mean, 00:06:28 Speaker 3 These things are still true. I mean, I don't think anything changed. It's just that those can't be the only ones. I mean, The classic one that I think we get a lot of flack for on the internet is we really want you to have a good calendar. And that one's sort of a double- edged thing, right? You have people like Pete who created OpenFlow, you know, my partner Rafael was doing. 00:06:52 Speaker 3 Before he got the choir. And that was a solo act. He did like a hundred other projects and just out of pure volume, you know, he was able to create something that set the world on fire. And so we're sort of in this different moment. Like maybe two years ago we'd say you absolutely must have a co-founder. And I think that that will help you, like everything else being equal, you should have one because this journey is long, hard and difficult and having a co-founder means that you're not alone. You know, our reality is totally socially constructed. Starting a startup is so hard because you are surrounded by people who don't believe that you can do it, that the systems are all fixed, that it's all zero- sum, that there is no way that you, an individual human being could do it. So, of course, having a breakthrough founder next to you would help you make him much more successful. 00:07:42 Speaker 2 What else can I do for your program? What causes your candidates to spike? Create a. 00:07:48 Speaker 3 I mean, this is actually an interesting one. I am curious, like how you've thought about how investing has sort of changed over time. I think DC and myself included, Like people attack YC constantly about, like oh, you only care about the Harvard Stanford Google Meta engineer. And you know, I think that critique is fair. And like I think we're going to go away from that. Like I think that's less and less important. Because now, again, It's like you can just write ten thousand lines of code in a single day. You can do the work of two thousand people, which actually is pretty wild to think about. How many employees are there at Meta? You know, even just thirty thousand—okay, tens of thousands of people on any given thing. And I think we're starting to enter this other age where we need to build those—we need to do ten times or one hundred times or actually two thousand times. 00:08:49 Speaker 3 And yeah, that's what I'm seeing right now. Like, you know, I can like I'm still holding down my full time job like managing and running, you know something like. I have a portfolio of like you know almost a trillion dollars. That's like my day job, and then at night, like you know, six am to eight am or six am to seven thirty, I got like ten workers going, and they're going and then check in throughout the day. And then around like, I don't know what when I go home let's talk. 00:09:21 Speaker 3 And then up in there, five or six reps on it. And so, and at a given day, I can you know I can do my full time job doing like eight nine hours of here and get ten thousand lines of code done on three different projects right now. All right. 00:09:40 Speaker 2 So I am not trying to delay the move to AI, but I did have just a couple quick questions about the Y C. So the process is thirteen weeks now, right? 00:10:19 Speaker 3 Microsoft, And you come in with an idea that here's like this fixed amount of work that I can do. And actually, I'm not going to be able to make it easier. There is a bug database with like eight thousand bugs in it, and I'll get through them all. And then this is the point: for two weeks, Whatever one is running, the direction of was just how do I make something people want? That's literally the t-shirt that you get on day one. And it sounds subtle. ; it sounds like you should be able to do it yourself, but Um, again, like what I've learned about YC and this was true for me. Um, reality is socially constructed. And then when you're surrounded by other people, uh, all of whom are trying to do that. And you know, there are very few other distractions. That's all you're doing. Um you can actually run fast. And you learn to run fast. You know as an investor I actually spent five years away from YC as a seed investor in both Initialized Capital and the um multi million dollar fund. 00:11:18 Speaker 3 Almost a billion dollars under management, and number of these seed investments, pre- seed investments. And I would sit in their office, and we'd meet sometimes several times a week. And I can never it was like that groundhog day where you wake up yourself to see that guy, and I can never seem to get the time. And you couldn't create the same fabric in those circumstances. And I would get frustrated because I've seen it done.; I saw it happen during our fifteen weeks. 00:11:45 Speaker 2 How much of it is co- learning? You learn faster because you can learn with everyone else versus maybe a bit of peer pressure that's put on you by wanting to do as well as everybody else. Oh, I think it's all of them. Both of them, yeah. 00:11:59 Speaker 3 I mean, it is like a very, very concentrated form of college. And, you know, the good thing that uh honestly, like if there are investors in the room. And like if you have some companies that you see incredible potential, but hey, like I again, if they just sped up a little bit or if they changed a few things about what they believe. You know, building a startup, this would work. Like they have all their engineering chops, so they're slinging ten thousand lines of code a day, but they're sort of doing it on the wrong stuff. Like my pick would be YC. That's what I did too. And I had multiple companies go from like it was gonna die to like work, you know? 00:12:32 Speaker 2 There is a cultural transformation that happens by being a part of that ecosystem. 00:12:37 Speaker 3 I think so. And I mean it takes like it takes a partner. I mean at YC, you have one partner who picks you and is like sort of your person for the life time. The company, And so what I can try to get people at West seated be totally aware of is like actually change the name department. So we're not like you know you guys are a special market, but it's essential partnership. And I'm not just trying. 00:13:05 Speaker 2 To spread that message. Wait, wait, are there elements that are more like structured education? Like are there certain. 00:13:17 Speaker 2 To the group in the curriculum. 00:13:19 Speaker 3 That's the thing that I've been trying to do now. I just open sourced how I'm using QuadPy called GStat, and got about 9700 stars in the last couple of days. And then I think that that might be the way to do it. It's like, I put my card on it. Obviously, Open Source 4. 5 is a revelation from Anthropic, And then people are like this one person can do the work of 2000. People is like really, really. 00:13:48 Speaker 3 Group are listening along. It's like less than point one percent of the world understands this yet. And so, My attempt at making this open source is actually like sort of being a person. This is exactly what worked for me. Like there's a and it's hilarious because I'm getting a lot of hate for it. It's like unbelievable amount of hate to people saying like you know, a plot skill, I think you're actually using skills yet? You guys use skills yet? 00:14:19 Speaker 3 Yeah, I mean, if the people if you if you do not get it yet, um go talk to people who raise their hand. Like a skill is just marked down. That's very different now because it's actually computers can read it and it's turned complete and you can have a conversation. So, it's actually I mean that that's that's sort of the transformation that's happening. So, I'm gonna quickly. 00:14:44 Speaker 2 Just so one thing. I've said to people when I've been out promoting my book, "No one's so fascinated with something that they'll learn it for free." You just give that back. And I would say if you're a technical founder and you're not doing this, you need to start doing this. You need to be talking about your product. You need to be talking about how it's going to change the world. The world is moving so fast, and you have to be on the edge of it. So. 00:15:18 Speaker 2 Talk this ideal, why Gary Tan? You got a lot going on. Why, you felt the need to go write code at night with your AI enabled stuff? I think what's funny about it. 00:15:31 Speaker 3 Is we've been probably doing this for a while. We've been way out on the edge, andum, I mean if you watch my podcast, we've been talking about live coding for years at this point. Right. Uh, your startup provided this service for a while. I mean my favorite story was, Actually, a little while, But this sort of I think it's kind of like as a IDE that's like hosted in the cloud. So if you if you are given that, you know, I bet a lot of your kids actually use it as uh installed by default in Chromebooks. Um, You know, the sort of idea that anyone can code, and if you are, uh, you know, You don't want to have to like get bogged down with setting up Linux servers and things like that. Uh and then Node.js is one. 00:16:17 Speaker 3 You know, it was working. It was working well, but you know, very very hard to make money in education. And along comes GPT-3.5 and then 4 and then uh, Right? - click happens, and it kind of copy starts talking about being a web site like you should just try it with the accept all changes, like nobody clicks on that, like I started clicking on that. And it started working. Uh, Carvajal is a genius man. Like in the last week or so he's figured out um how to research. 00:16:48 Speaker 3 Thing where overnight, if you want to be coming up with new machine learning techniques and breakthroughs, like just just by prompt, just by setting up a harness. So that's sort of like the extreme. You can imagine what's going on right now. 00:17:01 Speaker 2 So. So there are many people in the venture community that believe this is the biggest way in the history of their career, including people buying crypto for their kids when they're younger. I assume you agree with that? Oh yeah, definitely. Yeah so so that's part of why it's so transformative, And that's why you're saying, like, Even how you look at the candidates who might change back in twenty one years. Is it so different and these skills are so critical? Some of these things are taking it to the point where, if it's not AI, they don't want to talk to them. Are you guys at that hardcore level? 00:17:35 Speaker 3 I mean, How many sort of eighty ninety percent of the companies are software about ten or fifteen percent increasingly your hard tech that work in defense. 00:17:47 Speaker 3 But uh, even in that case, you would want them to be. And they are. They are. I mean, Paul and what he talks about from that angle. Yeah, This age means that software is no longer the thing that just got like very friendly to us. I mean, I have friends in hardware who are basically vibe coding. I mean, Vibe coding right now still has this tinge of, oh, like you shouldn't do that. And people look at the projects we do with machine learning. It's like, oh, no, no, let's just not call it that anymore. I'm kind of sick of fighting that war. And I would take the other side. I mean, I love peace. I think that like we should just call it that and like know that we're in a different moment right now. You know, last year or two years ago when this term was sort of invented, it wasn't that useful and it was hype. And it's like you know what? Like everything caught up in November, like Thanksgiving or so. And I found out about it because a bunch of my friends started playing with this. 00:18:45 Speaker 3 Basically they disappeared from their families. But I think like a third of the CEOs that I know have it as well. And once you try it, You'll realize like I was able to recreate my startup that took ten million dollars in VC capital and ten people, and I worked on that for two years. And I just can't play narcoleptics. Like, I remember sort of being on modafinil in Austin, Texas in two thousand nine trying to look for investors or partners to help fund investors. 00:19:44 Speaker 3 And you know, I don't need no daffodil with this revelation. Like, I am just up like I slept at four AM. I woke up at eight AM and my wife this morning was like," Did you sleep?" And I was like," I slept enough." Like, you know, I wanted to sleep more but. 00:19:58 Speaker 2 Well, because you wanted to get in and check on how things were going? 00:20:02 Speaker 3 Yeah, let's see what's going on with the ten workers. I got like three different projects going right now so. 00:20:07 Speaker 2 And why ten out of a hundred? 00:20:09 Speaker 3 Is there a management. There is. Like so one thing i just, Out is um instead of using Claude. Uh Claude likes to use Chrome through MCP, and it's so slow. It's basically unusable. And so um I I just vibe coded in like half an hour I was like, why is it so I I literally only have this conversation with him, he's like, hey Claude I want to use Chrome to test this thing, I know that you're smart, and you can do manual testing for me. 00:20:43 Speaker 3 You know, log in as a user and do this thing and test all the things. like, why can't you do that? it's like twenty minutes later it's like oh, like it's not working. you're out of context. like, you know, uh it's just not working. and i was like, well can't i just use playwright directly? like can we use the cli? i'm thinking like can i just do it a different way? was like oh yeah that's interesting why don't we do that? and so i got a branch. it made this thing. was oh my god! and then it worked! Like i made this whole feature because uh you know. 00:21:13 Speaker 3 Quan and I figured out this one thing, which is like, Why don't we just use Unix and like make a little command line tool that wraps this other library? It was fast. It was like two hundred milliseconds back to back. And I was like, oh shoot, this is crazy. I can not only can I. Like I have all the other pieces. Like the beginning part that I have um is actually a C++ module. So all the things that I had to do as a startup founder, I have a cloud code skill for it. So, I mean, something just like you should try it. Like if you load the cloud code, open a new thing and then load G Stack. You can literally just say like "Hey, I want an app that does a blog." And then let's like for instance, I want to post on Craigslist and I want to make an iPhone app. Right? You just open up Cloud Code. You load up this G Stack thing. And then you just say that in Planning Mode and then you go Plan CEO Review. 00:22:10 Speaker 3 My skill has actually it basically is like Brian Chesky in a box. It's like, oh, well, what do we want to do? And maybe we should do this. And, it actually goes out and hands off. Like let's think of the ideal from the startup that you want to make. And then let's work backwards from that. And then what can we do right now? And, then one thing you'll notice, though is all of the time frames is quotes. It's like well, it'll take about a month to do this. They'll say that they'll straight up say like and they use, Human terms, it's like it would take a human being one month to do this, like ten thousand lines of code. Because the average number of lines of code that I could write even on without knowing what I'm doing, you know, clearly all the way twenty hours a week, Like twenty hours a day kind of coder was maybe like one hundred or two hundred lines of code useful. But that's useful. It's like to do these ten thousand. 00:23:02 Speaker 2 Lines and are you seeing found modern day AI founders learning to do more than just coding? We've called it sort of sales, distribution, marketing all the other elements of the business. 00:23:14 Speaker 3 That's it. Like I haven't worked on that yet, but like it's probably something that something we need to do. And, that's something that our I mean what I'm witnessing at is like, you know, there's a CMO mode, There's an engineering mode uh and then I think a product manager needs to be able to use the product. And it's smart, because, like does screenshots, they'll say, like, oh, well, if you just. I know, like, I know. It's kind of interesting because I spent years and I was surrounded by people. Talking like this all I've known this for like my entire professional career. But like there is this magic thing that startup founders do that they're really good at. They're really good at what you or Ash got to be that um you know, I mean, all of these things, the founders, we all look up to them like this what they did. They just like ask very simple questions, they directed it. 00:24:10 Speaker 3 You know, An incredible amount of money and time and venture capital dollars went to a couple of people. Access like an executive who then can hire the ten people below them, who then can hire like a thousand people for that. And then you know, that was capitalism as legend. And I think like that might be down. Like the are missing is good. 00:24:36 Speaker 2 I love this phrase because that's how I felt. 00:24:40 Speaker 2 And, there are structural things in the venture capital community, where the later stage firms are getting bigger and bigger and bigger. And most of the rounds that they do are proactive. So, The founders didn't decide to go raise money, ; someone knocked on the door and said, "Here is three hundred million dollars. " And, at least in the capital of blood in the world that I've been, if you don't take it, they threaten to give it to your competitor. And so you have a top-down situation. Where the money just kind of shows up on your doorstep, And this is about to intersect with the point you are making that the company may not need that many employees. So, how does that solve where does the money go if you are highly autonomous, highly AI driven in all areas of your business? And someone insists on giving you a bigger hand to house. What do you do? Sam. 00:25:35 Speaker 3 Altman from OpenAI is a essay about artificial intelligence. 00:25:41 Speaker 3 In my eyes, what I think you should be doing here. I think it's time for us to go in the direction of this. Like there's so much going on right now in society. And I think that you know some of the people who run Frontier Labs may, in order to raise the money, are using more doomerism than they should. Uh, I think that. 00:26:11 Speaker 2 That's the best people going in. Because you describe it as a medical problem, and they want to invest in magic, 00:26:17 Speaker 3 Is that I would say that I like to invest in magic. I am fairly certain that people invest in things like. I mean, Magic is just things which are so improbable, but they strain like our understanding of how it can be possible. Marketplaces ten twenty years ago, But if you invested in all of the best marketplaces and like any given one, like the first time you use Google, the first time you use DoorDash. First time you've seen this, right? Any of you marketplaces will like revelations. 00:26:47 Speaker 2 We never said, yeah, we never said that Uber would cure cancer within three years. That's fair. Which is what some of these people were saying. Well, yeah, that's possible. Yes, 00:26:59 Speaker 3 I like that they said that. Right? But I think it's like maybe the wrong thing is like I think there's Jevon's paradox. I think that like we will find like, When there is intelligence, it is not zero sum. It is something that allows us to do a lot more with it. And so, I'll be honest and let me say something provocative. I think that what all of this stuff means is for us, like the people here in this room and people listening, we are here to try to make Star Trek the next generation. Okay? Literally. Like, I think about it as like I think that we. 00:27:39 Speaker 3 Post scarcity economy, I think that like you know, curing cancer is something I mean everyone in this room, like knows someone who's had cancer or a life experience with someone who's been diagnosed with it. And it's something that's like a human problem. But a human problem like that can be solved through technology, through understanding cancer, understanding the disease and then choosing to make the cure for it. And that takes knowledge. And so, that's why I mean. 00:28:10 Speaker 3 We're not trying to kill all the jobs. We're not trying to upend society. We are trying to actually solve problems that are. 00:28:25 Speaker 2 Actually broken in our world. One thing that is very nice discussed in the past, and the audience may not be aware of, you can just ask your favorite AI like government with their surveys and polls, does it? Anxiety about AI, and in the US it's like a seventy percent negative, and in China it's like twenty. So they're completely different mindsets about whether this is positive or negative. And I do think it's partly driven by the people that had to live with Michael from Games of David Doomer, which is kind of a crazy reality. Which is something I've never seen before in my history adventure. 00:29:06 Speaker 3 Yeah, I mean, I think the tricky thing here is like, They you could argue they have to because how else are you going to get a trillion dollars. 00:29:15 Speaker 2 But I don't understand why being negative creates fundraising personally but I think there's another goal. Let me try and get at it indirectly. Oh, I'm curious, yeah, no. So. Soum all of all of the youngest startups that are moving through these AI workloads, which models are they using underneath? 00:29:34 Speaker 3 I mean OpenAI and Grok? 00:29:39 Speaker 3 Like people are starting to use more open source models. I'm surprised that there isn't an American open source model. 00:29:46 Speaker 2 We can talk about that, but what causes them to get to that place where they shift? Usually time issues, right? 00:29:54 Speaker 3 So I feel like the big thing now is like actually I think we're in a good spot. Like a year or two ago, I was really going to agree that there would be some takeoff, There'd be one or two ideas that like basically get the you know get the AGI. Yeah. I think we're actually in a really, really good spot. I mean, We've been spending a lot of time working on agentic flows and things like that. It's like I can sit there and call it, but I can use the Codex two seconds later. And if it has a good. It's uh. And you know, not only that, I can ask Codex how to write code for this purpose. Like they'll be using. But Anthropic is great for super super smart stuff, but they don't know the latency model instances. So the best one for that is actually on Grok with Q and Llama 70 B. 00:30:38 Speaker 3 You know, version three is actually. gold medal. It's the open model that I'm brought to the queue, and that's fine. And the thing is, there will be another one that's even better. And sometimes it's a Chinese model. Andum, that's okay. All of that is actually great. Like I think that we what we really really want at this moment in time. And technology is we need competition. Yeah So. 00:31:02 Speaker 2 This this where I would get at this, which is if you go back to the internet. And right, you know, Ninety six, ninety seven, thirty percent of the venture dollars went to Sun and Oracle because every startup wanted the best technology. They want they didn't want the server to go down. Five years later, it was a hundred percent Linux and MySQL. And t here is a t here is an innovation phase. That's why I asked you when the point of change was when they have real users, and then t here is an optimization phase when you start worrying about performance and price. 00:31:37 Speaker 2 As opposed to just the product, And so you know, I am certainly seeing with our bigger companies when the revenue really starts to come in, they start experimenting with different models. Maybe not for the whole thing, maybe for sixty percent of the tokens or something like that. But, this is a roundabout way of getting to what I think the governance is all about, which is I think they want a rate before cap. But I've been saying that yeah, we've been fighting against that for a while. Yeah, so I mean I think many of these companies are. 00:32:08 Speaker 2 Are experimenting with the open models, many of which are Chinese. And I think it's going to be really interesting to see if the big models try and use Washington to put an end to that. Which would be bad for startups from my perspective. 00:32:23 Speaker 3 Absolutely. I mean, in simultaneous to that, Like I'm, hoping that Anthropic and OpenAI are highly likely to be similar to Meta and Google and Apple and the classic examples of big tech. 00:32:37 Speaker 3 For us, like I see, like we want to fight for a little time. We want to actually fight for the people in this room who, like we need distribution. We, you know, part of the reason why there's no consumer startups going on in like five or ten years is like Google and Meta basically locked it all up. And you know I guess if I were them, I would try and do that too. But at the same time, like you know when you have a second price option model, you can extract like all the gross profit out of every consumer business. And so as a result, What happened with the ecosystem. And it's going to play back again. So, that's why I think we need to continue to support open source, and we need to actually continue to support open weights models because that's actually a way that is a chunk of way to, you know, frankly what I have nightmares about. Like imagine you're using, you know, I won't name the frontier model lab, but it could be any of them honestly. It could be one that doesn't even exist right now like this is not about. But they just raise prices and then you can't switch. 00:33:35 Speaker 3 Or it's like Microsoft back in the nineties. Oh, what a nice business you have there. Like, I guess we'll just we'll just well they can't compete with them, 00:33:43 Speaker 2 Right? I mean, Curse was just called its biggest customer now to compete head on. That's right. They're already moving on the step. I think both model companies realized that if they didn't have any customer connectivity that they were at risk of being switched out. So, they're being smart and they have tons of money. 00:34:01 Speaker 3 So I mean at YC, we were uh. You know, kind of cut to the box when I'm thinking around that. It's like we believe in free markets, but then a functioning free market actually requires competition. And sometimes the government does have to step in and make sure that. 00:34:15 Speaker 2 I would encourage this probably is a place to solve it, But I would encourage everyone who shares this belief system to maybe create a consortium that can help provide maybe support or protection for open source because it's going to get spicy. 00:34:30 Speaker 3 That sounds right. Well, uh find me on X at. And certainly happens like send them my way and we will find hope. Like we have to stand for the little guy. 00:34:46 Speaker 2 Do you feel AI is soon? We talk about all the ways that AI enabled founders are going to look different. And now you're going to start testing for that at the application process, stuff like that. That's one of my projects. It's like about 3, 000 lines of code a day right now. Okay. And so, what do you think will change about the types of companies? Oh, 00:35:09 Speaker 3 Gosh. I mean, I don't know if you guys even care about this technical idea that we're going to be. I mean, I think clear communication matters a lot. So probably not unsurprisingly, I think this is actually the age of the product manager slash designer founder. Um, like I am technical. Uh, You know, I had to be an engineer and hire software engineers and seen them up for myself. But the reason why I'm so useful right now is like I can talk to ten different workers doing maybe ten or twelve or thirteen of these steps that keep going right away. Like if I can be like four to three, ten you know twenty workers. I mean, I think that's in the cards. But I can do that because I've done that job. Like that's sort of like the classic thing. 00:36:02 Speaker 3 When I was sixteen or seventeen years old, I was interning at a design firm called. The founder of the actually created the first Apple ecommerce store for Steve Jobs. And I said, like Andrew, how do I become like you? How do I become a CEO? He took me around all the different jobs and he's like, well see that person? Like you know this Kristen. She's a sales manager. She's the one who this what she does all day. And I had to do that job, and I hired her to go do that. And that's how I knew to get hired. I know that I'm an engineer. I'm sorry. Thank you. That's the job of the CEO. You have to know all of the different parts. I think that that's like the perfect allegory for this moment right now. It's a unique agency and case, and we also issue a call. We don't have to. 00:37:00 Speaker 3 You should not you do not need to be like I think. You should be a mild, deep, and a mile deep, and sort of inch deep, and like sort of for the rest of the mile. And. Then now it's like I think the shape of what society needs is like very different now in that intelligence is on top. And, then it's actually sort of being able to make connections across this whole wide. 00:37:31 Speaker 3 Be not making it like you could be a footprint, like all the way across. The agents will fill in everything else, like you know, the full intelligence that's already been on the internet and open source. So, 00:37:42 Speaker 2 Are you making a prediction that the founders of tomorrow will be different in these ways? And taste and aesthetic from this kind of nuance of elegance of design will be more different to then being able to write twenty thousand lines? Am I an English major man? Yeah. 00:38:05 Speaker 2 Um, going back to the types of companies, do you think they'll shift in an AI world? Do you see companies tackling different problems than. 00:38:14 Speaker 3 They did in the past? I think it's all the same. This is going to be faster. That's where I think about how companies operate today. Like, I think about my time at Microsoft all the time where it's like, I work on this. This product called ActiveSync, and it was how the Windows Mobile phone would talk to the Windows. It was like you know, at the same time in offices in Cupertino, There was a team of two people working on all of mobile Safari that was like that ran on the iPhone. That you know, I think that you know this sort of twenty thousand people can be by like two people, or. 00:39:00 Speaker 3 People has always been true because I think about that. I work at Microsoft and there's like this is all politics, it's all games. And I couldn't even. I remember meeting someone who works with synchronization service. I remember one of my PM, My PM mentor and I went over to the Windows office, and he brought a baseball bat. And I didn't know why, like why do we have a bat? Like damn, why are we doing this? And it was like you know yeah, We could not get any of our bugs fixed over the network. It's like you think about that and multiply that the function of like not being able to serve your user, like multiplied by like twenty thousand people. It's like no wonder that like our software is terrible, you know. Like my favorite example is this uh Siri application. Like it's frustrating because uh you know I I love my iPhone, I love a lot of their products, they're really cool, You know, the app is great, but like the calendar app is the worst app that I. 00:39:59 Speaker 3 I've ever seen in my life, and you know, like when so they're not even about money. Like that's what I keep happening all the way across the cycle right now. Like Apple has unlimited resources, right? They could hire anyone, they could do anything. And in fact, You look at their task force and actually like they could Peter Thiel if he actually wants to stay there. Like things inside with Eric Schmidt and things. Google has no ideas. Like why do you have forty? 00:40:57 Speaker 2 Big companies now have had two years of being told this is a huge wave, and they still haven't found a way to get there. It's kind of wild, like just wait; it had an eight- year head start, and then it's just waiting. 00:41:12 Speaker 3 So, I think maybe that's not comfortable for people in this room. It's like yes, there were notes that means yeah— this was always true like ten years ago, five years ago, Twenty years ago— the only way that a tiny startup sitting in their garage could even. The candle is like just raw aggression. It's like, how do we do ten times or one hundred times more than you know? How do I have a deep personal relationship with my first thousand users? That's like actually more accessible now than ever, and that's actually exactly what we need. 00:41:44 Speaker 2 Yeah, I am very curious if OpenAI or someone like that ends up recreating, a calendar or contact database or email just to cite. 00:41:57 Speaker 3 I guess, if you guys like the movie Everything Everywhere All At Once, which debuted here. 00:42:05 Speaker 2 Yeah. I feel like that's that movie makes me feel like what a founder who is looking for really, really great ideas can sort of load in their head. It's like across all this time, across all these different people, across all these different industries, there is just stuff that is happening. Like there is frustration, like there is boredom. There is. 00:42:27 Speaker 3 Like, If you can step into the shoes of other people and what's going on for them, like what are the jobs to be done? And I think that big tech doesn't ask that question because they have moats and they sell preference. You know, they don't have to work hard for this. But, that's why like some of the self preference we've always should just keep it open. You know, like we need to allow for new entrants, People in this room and people who are listening to create new technology and then have a direct relationship with the people on the other end. 00:42:58 Speaker 3 Cases, like you know, and it was sort of at this moment we're like, you know, maybe it's not even software. Like maybe it is agents. Maybe, it is agent orchestration and helping everyone else in society have their own personal agent. Like, you know, right now, um you know, we rely on someone like Keith from OpenAI to create this new package, but it's like actually that can be built for like every industry in the world. Like one got one and it will be. It's like guaranteed to happen. It's like there Look at the GDP pie. And like what percentage of that actually has any software in it at all? Like, you know, even before AI was like I don't know, like ten twenty percent maybe. Like, the bulk of business in the world still happens over uh text, email phone faxes. Right? And literally, you know like literally uh I think the world's shipping industry is still mainly using emailing. Uh Excel spreadsheets back and forth. And so you know that's true right now but. 00:43:58 Speaker 2 As your biotroding on the technical question, Do you think we reach a point where the database becomes obfuscated to the user? Like in SAS, even today they call it "what's this thing on top of the correct database?" Oh, one big you know shop plan. But otherwise, all these systems have an underlying database. It's deterministic. Do you think we'll get to the point where we won't? Have awareness of of the exact database that's underneath there and trust the agents to manipulate the data. 00:44:35 Speaker 3 I mean, personally, I don't think so. Like, I think we're going to have SQL databases forever. Andum, I have this. I mean, maybe am the one who's wrong. Like i was uh debating with an engineer on my team this morning. It's like he said like hey, I want to make an AI agent be able to do a bunch of admin tasks for me. Am like, I mean you know even Karpathy uh i think said that, His auto researchum agent that was like running with like full permissions, like dangerous system permissions. We do a couple of projects, and we are going to create friends. Better than takers, 00:45:09 Speaker 2 Yeah. So, you know, I guess I don't know. I think that databases are important. Access control is important. And then, um, your LLMs are amazing, but like there is something that is like I actually am curious. Like maybe it's not the final form. 00:45:27 Speaker 3 Kind of like Pokemon, there's like another level or two out there. And like, I you know, I frankly hope so. Like, it's actually really wild to what degree we have to build. Um you know very, very infrastructure data centers in some sense um to get this. I mean the intelligence is so astonishing that we're willing to pay almost any price. Um I mean and products fast mode, It's like who would have thought that people would be willing to pay that much? But honestly now that I have it, Give me ten x faster. I take time so much. 00:45:57 Speaker 2 Yeah. Um, before we go to audience questions, Let's hit on a couple of big topics that the industry is worried about or caring about. Um, stay private forever? What's your opinion of this? Especially since there is an investment arm inside of Y Combinator. 00:46:16 Speaker 3 Yeah, I think it's true. I mean, If you talk to a lot of the founders who are YC founders and you talk to the founders. Like, they're incredible people who are very, very ambitious. And the public markets sometimes do not help, do not really support founders who are like that. And so staying private honestly kind of makes sense for them. But I would love for them to go public. 00:46:42 Speaker 2 Is why they've gotten liquidity in a private company? 00:46:46 Speaker 3 Yes, yes. I mean it's very strange stuff, right? Like the scale AI exit is you know. 00:46:53 Speaker 2 That, but I am just participating in a secondary kind of thing. 00:47:00 Speaker 3 I would have initialized it done it in the past, yeah. But I mean at YC. We just try to, you know, we just try to move there forever and very long time, yeah. 00:47:12 Speaker 2 You've been outspoken on the suggested California twelve tax. Do you want to talk about why you are so strongly blamed? 00:47:23 Speaker 3 Yeah, I mean, The hard part about what they've come up with. So if people haven't been paying attention, there's going to be on the ballot in November. It has not qualified yet, but they're going for it a five percent one time tax. And we all know what these taxes do; everyone signs. But it's actually more profound than that; it's actually unrealized gains tax. So, if you are in this room and say your company like you are so lucky to get a. You know, paper valuation of five billion dollars, and you're worth a billion dollars on paper. Well, you don't you have to pay five percent of your holdings at that time. And if your company went to zero, actually like you just be out for that. 00:48:03 Speaker 2 You'd just be sitting on a. That's right. You know what I'll fix it. 00:48:06 Speaker 3 And. So the thing is, it's alsoum a tax on things in order to keep taxes on. So, you know, let's say you're well beyond having paid all of your taxes like they get to double dip. Um. I mean, honestly, like the millionaire tax. 00:48:23 Speaker 2 And does the current version also have this thing where it measures based on voting? Yeah, 00:48:28 Speaker 3 Yeah. So I mean, I've had friends of mine have to leave the state, like take their families and move literally before January first of last year. On the off- chance that it passes. Yeah. I mean it's backdated right? So I think this is. Uh you know personally I don't care about taxes, but. I care about what's fair and what will actually help innovation. And you know, California is in sort of this insane moment where it's actually a resource trap. Like there's so many resources, but if you look around, like you know I've spent a lot of time looking at homelessness policy. Like we spend more and more money to get worse and worse outcomes. Maybe for virtue signal, And like we shouldn't do that because the things that we do in San, Francisco or in LA are not compassionate. 00:49:18 Speaker 3 And then they come at people saying, like, "Oh, you know, fat cats business tech people. Like all they care about is." I was like, "No, that's not correct at all." Like you know I'm more than happy to pay the tax. Like I'm part of the society just like everyone else. And, you know, I want to pay the tax, but I want it to go to things that make sense. And that actually serve one another. And that's not what's happened right? Like we're paying for million dollar condos that are used as drug dens. People dying. Yeah. And that that's not compassionate, Like it is illegal in California right now for the state to fund permanent supportive housing that is dry. Yes, I know that. Which is totally nuts. 00:50:02 Speaker 2 Even even a shelter you can't drug test, 00:50:06 Speaker 3 Really. And so you know, I mean, I was talking about that like I think 10 years ago, like you know, in a room like this, I don't think anyone would talk about it. But ideally we could talk about it because. Like no one else is going to talk about that, right? Like I get tech and business, like we're fine with the tax, but we need an effective government on the other hand. And the only way we can get that is like we have to go all the way into. 00:50:29 Speaker 2 Well, you noted this on a podcast, but that situation is set up because of the proposition process in California. So the legislature or the governor didn't bring this; it's being proposed actually by a union, SEIU union that has put it on ballot. But. It's voted in. They have to accept it. 00:50:48 Speaker 3 Yeah, I mean, like it or not, like that's what I've faced here. No, not enough housing. Uh, watering down of our education. Did, you know that it's still almost impossible to take algebra as a public middle school student in San Francisco? Because they killed off the uh. Yeah, I mean it's like unfathomable. It's like. It really is insane. I wouldn't be able to. I'm a public. I'm the product of public schools. And there's no way I would have been able to study calculus by senior year. 00:51:16 Speaker 3 Computer science and computer engineering, and do anything that I did. Like, I didn't grow up well-off. Like, you know, we were food insecure sometimes when I was a kid. You know, Like i, i needed my public school and I needed my math teachers to teach me how to do the things that get me today. And I want every, you know, we want our society to work, and it's not working for us. And, we've got to vote these people out like we actually have tech people, and people in business have to get political power and cannot be afraid. 00:51:46 Speaker 3 We have to speak up because we actually can solve the problems of our society. 00:51:52 Speaker 2 It's really sad in a lot of ways. I feel so fortunate to have been able to spend twenty five years in Silicon Valley and be a part of the ecosystem. And there are pieces of it that are just so wonderfully magical, you know, the amount of sharing that goes on, the amount willingness people have to mentor and reach out, the way that you can, Like fail and then just immediately be into something else, And like it's just so wonderful that and the thought that someone would intentionally start something little nuts, like from a high level from my perspective. It might be really good for Austin, though. No, it could be great for Austin. I think it already is in a certain bit, But uh, but I'd like to think they, they could all succeed and not that one has to succeed at the expense of the other. 00:52:42 Speaker 3 Yeah yeah I mean for us like we, We want startups to succeed, and you know, The reason why we're still in San Francisco is that the rate of unicorns is actually two point five x higher if you stay in the San Francisco Bay Area. I agree. And like, if they kill the golden goose, I mean, the eggs should break. Let's eat the eggs. You know, like let's share the eggs with everyone. Don't shoot the goose. Yeah, I mean that you know I am sure that goose tastes really, really good, but we only need it once. 00:53:13 Speaker 2 Let's see what uh, Questions look like. I think the top those up real quick. See if any of these pop for you here. All right. What will the world look like when ninety nine percent of people can buy code? 00:53:25 Speaker 3 That's a good question. Like, some of it is like, what are we going to be doing for one another? Andum, I think it might actually be in the operating system level. So, you know, uh if you watch the movie Her, Like I think there's going to be this moment where our, you know we're not going to open up our phones and like look at this. 00:53:45 Speaker 3 Probably going to like have something that's just in time software. It's going to be very different. I mean, shaping that. 00:53:55 Speaker 2 How's the bar raised for early stage investment because of my? 00:54:01 Speaker 3 I guess we're starting to see it in the license batches ourselves. It's, like about half of the companies are all the way out on the edge, like they are coding times running faster lines. 00:54:18 Speaker 3 They're better at it than I am, actually. It's. 00:54:21 Speaker 2 Like there is a whole new skill set. If you are not a part of, you are left out. 00:54:27 Speaker 3 And it's actually really hard. I mean, I have software engineer friends who were like in denial. They say like this isn't real, but as they mentioned this to you, They're like costs so much markup, and this is just using the same trite that company does scams. It's like that's. 00:54:48 Speaker 3 The funniest thing is like, you know, rice is already good at like I don't know. This not a pun. It's like I actually genuinely want people to be successful. And this actually probably, this the good news actually. Like the very interesting thing about this. And this I feel like it's true across all of for creative people. All you have to do is like open up and use the tool. And because you know what you know, you're going to be all the way out on the edge. 00:55:18 Speaker 3 A top one, you know. If you're a good engineer, Like the ten x engineer today can be that two thousand x and like and it's very strange to run across like the ten x engineer who refuses to become that two thousand x engineer. Like it seems like that should happen, but I think like there's a mass. Like I think that's happening pretty consistently. Yeah, yeah. And uh change the chart. 00:55:41 Speaker 2 Especially if it was your superpower. 00:55:42 Speaker 3 Yeah Does that book Who Moved My Cheese? Yes I feel like that's even. It's a very it's a short, very simple book, but I think it's the defining one. 00:55:50 Speaker 2 One of the other things, I've noticed is people that that roll around in the technology come to understand what else it might be able to do. And. So it's almost like there is this exponential or accelerated launch once you get into it, because two weeks in, four weeks in, Your mind has expanded in terms of what you think is possible and use cases that you can use. And so you're literally running away with. 00:56:18 Speaker 2 There's a question on would YC launch in other cities. 00:56:24 Speaker 3 Yeah, I mean, we're openly, especially because of what's happening in California, like we don't like to have all of our eggs in one basket and especially when you have some uh some loose killers out there. So we've got a Cambridge, like from Cambridge? I think Cambridge Massachusetts is probably our uh I mean, maybe this is uh the example of like look like we're not against taxes. Like, You know, Massachusetts actually has like a millionaire tax. Like I think it's five percent or four percent on uh every dollar above a million dollars in salary. It's like actually that's a normal tax. Like it's not this crazy, you know, If you have uh super voting shares, but suddenly you're going to lose, like, you know, one hundred seventy percent of your net worth in taxes. Um You know there are ways to do this that work really well. I mean Cambridge has a great school system. 00:57:18 Speaker 3 Very comfortable with, you know, I think California is we are on the edge of what is not functioning, and we hope to turn it back though. 00:57:26 Speaker 2 What will take for you to run a batch here in Austin? 00:57:29 Speaker 3 Oh my god, I mean I'd love to. So, I mean some of this, I need to hire a partner who's here or like, have you know, we hired our first partner who's based in Cambridge full time on Kap Gupta, and he was incredible. 00:57:40 Speaker 2 All right well hopefully we'll see that one day. There's a questionum, How can I avoid my startup being just another flawed skill? 00:57:51 Speaker 3 I mean, the great thing about it is like have customers and like, I mean, again, It's ninety nine percent, ninety nine point nine percent of the people on this planet are like, you know, everyone knows maybe I'm online too much, but like I always think of that meme where it's like. They don't know, and it's like a room, full people, all dancing, all dancing. And uh, you know. There's one guy in the corner. He's they don't know that everything's about to change, and that's like how I feel about all of this work. 00:58:21 Speaker 2 And you guys are really big on get customers fast, like even in the third program. Yeah, 00:58:27 Speaker 3 I mean, So the answer I think is like going back to what I said earlier is like empathy. It's like just literally if you can put your put your feet into like the shoes of another person. And totally create that thing and understand what they're. 00:58:42 Speaker 2 Okay, this is the last question. You started companies in addition to running Y Combinator, and you see all these companies. If Gary Chan was forced to be a founder tomorrow, what ideas would you be most enthralled by? 00:58:55 Speaker 3 I mean, I sort of did that recently. Like, I am starting. I mean, I released a bunch of open source and then aside from that, I have" There Is This," which is" There Is This" board. Which is right now, it looks like a blog, but there is it's actually kind of like. 00:59:12 Speaker 3 WordPress and Meetup had an AI baby, and so I think that I mean, the great thing about it is like we're going to use all of that. Like one of the fun things that, And this is sort of the shape of like the kind of features I feel like we can do now. We had our first launch; there was four hundred people. They all had to fill out the essay, but then at the end, we didn't just like break into a little bar. I had people; I did custom introductions to the other people. They needed to, and I had like here's all of their bios, and here you ask this other person this question. And I basically made everyone walked away with at least three or four new people who like they could probably go have dinner with them and just mind meld with them. And so, you know, I mean, I think that that's like one concrete example of like what I i mean, this is one, but probably millions. 01:00:11 Speaker 3 I think it's like that. That's, one of like a million different things that the world sort of needs right now. It's like, how do we build software that, like, I mean, what do people want? They want connection. They want meaning. They want community. It's like, I don't know, but that's what I want and that's what YC is building book-based at YC, like having these events is like That's what we do all day. That's what we do all day, and it was like We need not a little bit of it. Like I need two thousand x more of that in our society. 01:00:41 Speaker 3 Have that in our society. 01:00:44 Speaker 2 Well, I didn't I didn't take any time up here because I knew we wanted to focus on Gary talking about my book with it's called" R unn ing Down, a D ream". And it's about how to how to find and thrive in a job where you actually belong. And this is something that I've talked with Gary about before. Is he is in that place for sure, Running what a common area and what common areas are going to be the future. And because he's the one who found it, so thank you very much. Hi everyone, buy his book!